TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 915
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....s 35D of the Act. 6. The learned CIT(A) has grossly erred in law and on facts in confirming disallowance of Rs. 9,13,861/- made by the ld. AO in respect of Public Issue expenses." 3. The Hon'ble Gujarat High Court has set aside the ground Nos. 5 and 6 for fresh adjudication in its Tax Appeal No. 509 of 2012 vide order dated 12th February 2013. Accordingly, we proceed to hear the ground Nos. 5 and 6 for fresh adjudication. 4. The interconnected issue raised by the assessee is that the learned CIT (A) erred in confirming the disallowance of _994421/- and 913861/- under section 35D of the Act on account of public issue expenses. 5. The facts in brief are that the assessee in the present case is a limited company and engaged in the business of Manufacturing of Multi - layer Tubes, Printed products incl. Labels / Stickers and other Specialty Packing & Plastic Products. The assessee in the Assessment Year 2000-01 has incurred public issue expenses amounting to _10,63,81,582/- only. The assessee accordingly claimed 1/5th of such expenses for Rs. 2,12,76,316/- under the provisions of section 35D of the Act. However, the AO found that there are certain expenses amounting to Rs. 49,72,1....
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....s." 15. At the outset, we note that, the identical issue raised by the assessee in ITA No. 1510/AHD/2009 has been decided by us against the assessee vide paragraph No. 11-12 of this order. For the detailed discussion, please refer the relevant paragraph. Respectfully following the same with do not find any infirmity in the order of the authorities below. Hence, the ground of appeal of the assessee is dismissed. 16. In the result, the appeal filed by the assessee is disposed of as indicated above. Coming to ITA No. 1890/AHD 2009 A.Y. 2003-04(Revenue's Appeal):- 17. At the outset, the learned Counsel for the assessee before us submitted that, the impugned appeal filed by the Revenue has wrongly been listed for the hearing. As such this appeal was not restored back by the Hon'ble Gujarat High Court for fresh adjudication. Accordingly, the learned AR prayed before us for dismissing the impugned appeal of the Revenue as the same has already been disposed of by the ITAT vide order dated 06.01.2012. 18. On the contrary, the learned DR conceded to the argument made by the learned AR for the assessee. 19. In view of the above, we hold that the impugned appeal filed by the Revenue has ....
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....Supreme Court in the case of NTPC Ltd Vs.CIT reported in 229 ITR 383 wherein it was held as under: "Under section 254, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the department have a right to file an appeal/cross objections before the Tribunal. There is no reason why the. Tribunal....
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..... The assessee further claimed that its GP also declined due to increase in the price of electricity and fuel in comparison to immediate previous year. The assessee in support of its claim filed copy of electricity and fuel bills having bill value of 1,00,000/- and more. iv. The assessee also claimed that its account were audited by independent auditor, internal auditor and tax auditor and all the details were examined but there was no adverse comment by them. The assessee in support of its contention filed the copy of quantitative details of opening & closing inventory, raw material purchased & consumed, finished goods produced and sales made during the year under consideration. It also submitted monthly sales and purchase details along with the name and address of debtors and creditors. 29. The AO issued notices under section 136(6) of the Act to four different suppliers/creditors but received no response from three suppliers. The assessee has made aggregate purchases of Rs. 51,53,778/- only from three parties. The AO in absence of any reply in response to the notice issued u/s 136(6) of the Act held the same as unexplained expenses u/s 69C of the Act and added the same to the....
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.... a entry of the trading account. It is further seen that the gross profit has fallen from 43% in preceding year to 37% leading to a fall of 6% whereas the AO has only added GP at the rate of 3%. The estimation made by the AO has thus been found to be fairly reasonable and does not requires any interference at his stage. Consequently the addition of Rs. 1,75,39,681/- made on account of low GP ratio is confirmed and the ground of appeal No. 3 is therefore dismissed." Being aggrieved by the order of the ld. CIT-A, the assessee is in appeal before us. 34. The learned AR before us submitted that all the details were furnished before the authorities below and there was no defect pointed out by them. As such, the non-response from the supplier and decline in GP cannot be the ground for the rejection of the books of accounts. 35. On the other hand, the learned DR vehemently supported the order of authorities below. 36. We have heard the rival contentions and gone through the facts and circumstances of the case, including the materials available on record. As per section 145 of the Act, the AO is empowered to reject the books of accounts of the assessee and make best judgment assessment....
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....e for the fall in GP was nowhere controverted by the authorities below. Lower gross profit as compared to earlier year cannot be the ground to reject the books of accounts. In this regard we take the support from the case of Malani Ramjivan Jagannath Vs Asstt. CIT reported 316 ITR 120 where the Hon'ble Rajasthan High Court held as detailed under: "The Tribunal committed basic error in not appreciating the reasoning given by the Commissioner (Appeals). It was trite to say that in the facts and circumstances of the instant case, account books were maintained as they were ordinarily maintained year after years and which were found to yield a fair result. Mere deviation in gross profit rate cannot be a ground for rejecting books of account and entering realm of estimate and guesswork. Lower gross profit rate shown in the books of account during current year and fall in gross profit rate was justified and also admitted by the Assessing Officer as well as Commissioner (Appeals) as well as the Tribunal. Therefore, fall in gross profit rate lost its significance. Having accepted the reason for fall in gross profit rate, namely, stiff competition in market and also that huge loss cause....
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....plete or correct from which the correct profit cannot be deduced. Whether presence or absence of stock register is material or not, would depend upon the type of the business. It is true that absence of stock register or cash memos in a given situation may not per se lead to an inference that accounts are false or incomplete. However, where a stock register, cash memos, etc., coupled with other factors like vouchers in support of the expenses and purchases made are not forthcoming and the profits are low, it may give rise to a legitimate inference that all is not well with the books and the same cannot be relied upon to assess the income, profits or gains of an assessee. In such a situation the authorities would be justified to reject the account books under section 145(3) and to make the assessment in the manner contemplated in these provisions." We also find support and guidance from the order of ITAT Bench in the case of Haridas Parikh Vs. ITO reported in 113 TTJ 274 wherein it was held as under: "Unless the Assessing Officer is able to point out certain transactions which have been left to be entered in the books of account or that the assessee has sold some of the items at ....
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....1140, 1342 to 1344/AHD/2015 in its own case vide order dated 25.11.2019 by holding as under: "8. We have gone through the relevant record and impugned order. Now question before us is that whether on the basis of survey conducted by the Income Tax Department claim of the assessee for depreciation should be allowed or not. After detailed deliberations and both the parties we heard in detail in support of its contention, Ld. A.R. submitted all the details with regard to purchase of machines. On the other hand, revenue contention was that machines were not purchased on the given date and payment was made through journal entry. When we specifically asked about the payment made in order to purchase machinery. Ld. A.R. shown us the payment detail and they were made through banking channels and relevant details of the said payment were shown to us and list of suppliers with invoices of machinery purchased were also submitted before the lower authorities. And ledger account of M/s. Vimpsan Precision Pvt. Ltd. was also submitted before the lower authorities. Apart from that reconciliation chart of plant and machinery with Dalal Mott Macdonald report were also submitted to the effect t....